Global Development in the Age of Automation: Catapult or Detour?

Flickr Image Courtesy of Fiat Chrysler Automobiles

Earlier this fall, renowned physicist Stephen Hawking told readers on Reddit’s Ask Me Anything question series that despite machines having the power to enable humanity to enjoy a life of luxurious leisure, current trends point toward “technology driving ever-increasing inequality.”

Hawking joins a chorus of influential voices from academia and public and private sectors who express cautious optimism about this era of expansive technological change and its impact on quality employment and economic inequality. The growing sophistication and declining costs of technologies such as 3D printing, robotics, and the Internet of Things that define this new age of automation are changing the way goods are produced and delivered and, by extension, transforming labor markets around the world.  Experts point to labor’s declining share of GDP, structural unemployment, and rising economic inequality in many countries as signs that this transformation is underway. Some estimates suggest that more than 47 percent of the U.S. workforce is at high risk of automation.

The risks and opportunities of this era of technological change are important to consider from the viewpoint of low-skilled workers and vulnerable groups, particularly in developing and emerging economies. These groups make up a large portion of the workforce in global manufacturing and agriculture value chains – areas that are increasingly at risk of being replaced by machines. They also stand to gain the most from harnessing technology as a driver of economic opportunities and improved well-being.

Development Catapult

Labor-intensive manufacturing has been an important engine of economic growth for many economies, such as Bangladesh, where the garment industry is the largest employer in the country. More than 3.5 million people work in the industry, 90 percent of them women. The industry helped reduce the poverty rate in the country from 56 percent in 1992 to less than 32 percent two decades later.

Technology has played an important role in the growth of these industries and economies. This era of technological progress could serve as a catapult for many developing countries, helping them leapfrog low-skilled manufacturing to create high value industries that meet the demands of an increasingly digitized and knowledge-based economy. This development catapult will create jobs as well: according to one study, over 1 million robot-driven jobs could be created by 2016. Research also shows that the Internet creates 2.6 jobs for every job lost to increased technological efficiency.

Technology can also unlock new economic opportunities by making the means of production accessible to more people, enabling new business models like the sharing economy. For example, online work has enabled women in remote areas in India to earn cash while caring for children and elderly family members. Facilities such as “makerspaces” and tech incubators provide access to new technologies, which can bring more people into the economy through self-employment and entrepreneurship.

Moreover, jobs in the technology industry may offer higher salaries. As part of its Digital Jobs in Africa initiative, the Rockefeller Foundation found that in countries such as Zambia and Ghana, jobs in the ICT sector provide higher than average wages and are less volatile than much of the informal work available to most youth.

Development Detour

If automation leads to a shift away from labor-intensive manufacturing, what will this mean for millions of entry-level job applicants? Could this actually be a development detour for many countries?  The number of jobs expected to be created in this age of automation pales in comparison to jobs created through labor-intensive manufacturing. In 2009, 99 million people were employed in the manufacturing industry in China. Foxconn, the Taiwanese contract manufacturing company and supplier to Apple and other consumer electronics companies, will use robots and machines to complete 70 percent of its assembly line work. Although automation may be an opportunity for China to maintain some of its manufacturing competitiveness in the face of rising wages and competition from other countries, it is not unreasonable to anticipate that China and many other manufacturing centers around the world could see significant job elimination with automation.

Many low-skilled workers are likely to face barriers in accessing these opportunities. These jobs will likely require more complex skill sets, making it difficult for lower-skilled, less-educated workers to capture the opportunities created by automation. Instead of hiring line workers, more advanced factories are hiring industrial engineers. This is particularly concerning for women who, in many countries, face significant gaps in education and skills needed for many jobs created through automation.

Technology is also likely to affect the quality of jobs and protection of worker rights. Automation could make certain positions more attractive if machines fill the more physically grueling, unsafe, and lower paying jobs. Wages could rise dramatically if the benefits of higher productivity are returned to workers but it may be harder for human capital to compete with cost-effective machines, prompting downward pressure on wages. Furthermore, more “on-demand employment” or contractor work that is generated by technological advances can be unreliable and offer limited benefits and weak protection under traditional employment law.

The age of automation is no longer science fiction that only Hawking and futurists can envision. This future has arrived, and just as it could serve as a catapult for global development, it could easily lead to a detour with roadblocks and challenges along the way. The answers are not easy. Investments in education and skills are a natural starting point, but this can’t be left to policymakers alone. The private sector is an essential partner in designing and applying automation in a way that respects worker rights, creates opportunities for more people, and drives inclusive economic growth.

This article draws on findings from research the author conducted while working at Business for Social Responsibility (BSR), a non-profit business network. For more information about this research please see the BSR issue brief.


Can Digital Privacy Be Protected By Borders?


In the United States, if the FBI thinks you committed a crime, it can go to a judge for a warrant and search your house. But if your house happens to be in Ireland, would a U.S. warrant give the Feds permission to search your property? Of course not.

But what about digital property? Does the FBI have the authority to access someone’s data, even if it is stored outside of the U.S.?

The Second Circuit Court of Appeals is trying to answer that second question. Microsoft and the U.S. Department of Justice are waiting for the decision that will determine whether or not law enforcement officials can access emails stored outside of U.S. borders. No matter which side wins, the ruling will affect discussions about national sovereignty and how it relates to the Internet for years to come.

The case began when a judge issued a warrant requiring Microsoft to turn over emails of a suspected drug trafficker that were stored on an Irish server. A lower court upheld the warrant’s validity when the company protested. Microsoft fought back, arguing that such a demand was an extraterritorial warrant and that investigators needed to get an Irish warrant to access the emails. The U.S. government countered that because Microsoft is based in Redmond, Washington, all of its data is subject to U.S. warrants.

Behind the dispute is the practical matter that it takes an average of 10 months to process a U.S. warrant request under a mutual legal assistance agreement. Pulling data from the Irish server remotely would take minutes.

Microsoft—and most other technology companies—provides its services in the cloud, storing data on remote servers to provide quick, multi-device access to consumers. However, the term “cloud” itself is a misnomer. It evokes the idea of data floating about, placeless. But this notion of the cloud is an illusion: data in the cloud is stored on physical servers that are situated squarely on sovereign territory, and the companies that manage the data are subject to the laws of that country.

If Microsoft wins its appeal, the U.S. government would be compelled to go through established mutual legal assistance processes to get its hands on data stored on servers outside of U.S borders. Judging from Ireland’s support of Microsoft’s position, other states favor this outcome and would quickly embrace an affirmation of their data sovereignty. Some countries, such as Russia and Australia, already require data about their citizens to be stored locally, in order to keep it beyond the reach of the United States. At least 20 more countries have considered similar laws.

If Microsoft wins its lawsuit, such “data localization” regulations could become the norm. But if that happens, technology companies would face a compliance nightmare. They would have to build expensive data storage facilities abroad, fork over hefty fines, or give up on major markets. Startups with fewer resources would find it exceedingly difficult to expand abroad, stifling the spread of innovation.

It’s not just a business problem, either. Many warn that if the court rules in Microsoft’s favor it could pave the way for a “Balkanization” of the Internet that would fracture the global network.

On the other hand, if the Department of Justice wins, the outcome may not look all that different. Microsoft insists that extending the reach of search warrants to data stored abroad will start a “global free-for-all” in which “any country with jurisdiction over a provider can reach into any other country” and plunder its emails. Suddenly, foreign companies offering localized data solutions would find their services in high demand with neither the companies nor their data subject to U.S. law. The resulting patchwork of local solutions sounds remarkably similar to the “Balkanization” situation the experts warn of.

At the moment, those warnings sound particularly prescient. Last week, the European Union’s Advocate General invalidated the existing Safe Harbor agreement that has governed data transfer from E.U. to U.S. servers due to concerns about privacy and government surveillance. Microsoft immediately filed a notice with the court, pointing out that the opinion “could subject U.S. companies to charges of violating European law any time they transfer personal data to the U.S., especially when U.S. law-enforcement agencies instigate the transfer.”

Concepts of national sovereignty on the Internet are getting hazier by the day. Last month, France’s data regulator ruled that the European Union’s “right to be forgotten” directive extends beyond and other European search products to all search results, worldwide, for French citizens. Google responded: “As a matter of principle we respectfully disagree with the idea that one national data protection authority can assert global authority to control the content that people can access around the world.”

Simultaneously, China is reportedly pressuring U.S. tech companies to sign a pledge to turn over user data and source code in exchange for access to the massive Chinese market. Language in the document suggests the government wants a back door into encrypted communications, which could violate the privacy of foreigners communicating with Chinese citizens. Like France, China seems to prefer extraterritorial application of its domestic Internet policy—and if companies want access to the Chinese market, there may not be much they can do about it.

What the U.S. court really faces in the Microsoft case is an existential decision about the sovereignty of nations in the age of a global Internet. No matter which way the court rules, the case is indicative of problems we will continue to face as technology, built not to adhere to any international political order but to facilitate broad information-sharing and communication, clashes with an entrenched system of physical borders and interlocking jurisdictions that simply cannot contain the flow of data.

The Taliban’s Fate

"Taliban insurgents turn themselves in to Afghan National Security Forces at a forward operating base in Puza-i-Eshan -a" by isafmedia - originally posted to Flickr

Why should the Taliban embrace the recent reconciliation option initiated by the Afghan government? The answer lies in the simple fact that the Taliban are no longer a popular movement. It has increasingly lost its claim to any form of political legitimacy, and many Afghans now view the group as morally bankrupt.

Moreover, the group is in organizational disarray. Once Mullah Omar’s death was revealed, there was disunity and confusion over who the new leader should be—and whether or not that new leader could gain the allegiance of the group’s rank-and-file members. Already, a schism has emerged between the Taliban’s Pakistani and Afghan members. Even within the Afghan Taliban, certain prominent members parted ways with the central leadership. This was demonstrated by the discontent of Mullah Mansour Dadullah, a famed Taliban fighter who exposed Pakistan’s secret agenda for the Taliban and who also challenged the legitimacy of the group’s new leader, Akhtar Mohammad Mansour.

The challenges facing the Taliban show no sign of abating, and it will become more and more difficult for them to remain a viable movement.

Now, Taliban members face a stark choice: they can either continue their acts of violence and terrorism—and risk losing whatever popular support they still have—or they can agree to sit down and negotiate with the government in good faith.

Will all Taliban members be willing to make the latter choice? Certainly not. But Afghan Taliban soldiers who are by birth citizens of Afghanistan may be willing to give up their fight against the central government.

But unfortunately not all Taliban members will be willing to compromise. Other Taliban soldiers are affiliated with warlords or international terrorist groups, such as Al Qaeda, and they will not negotiate with the government or give in.

Yet, luckily, after 14 years of war, there are fewer and fewer of those diehards. The Afghan government has not fallen, and the Taliban does not control large portions of the populace or the strategically located provinces in the country. Also, in the most recent battles, the Taliban have incurred much higher casualties than the Afghan security forces. Their recent take-over of Kunduz province (which lasted less than a week) resulted in catastrophic casualties for them. This battle also reaffirmed once again that the Taliban movement while socially and morally incompatible with the wishes of the Afghan public is also operationally unsustainable.

Given their military setbacks and the national disapprobation that they face, the Taliban’s best option is to reconcile their differences with the Afghan government. Most Taliban fighters, in fact, are not that different from many of those who serve in the government. They share a common history, culture, and religion. Such commonalities make reconciliation a real possibility.

However, if the Taliban wants to pursue negotiations, they are running out of time. The country’s political elites and the public have already grown weary of the peace talks, and popular reactions against the Taliban’s most recent wave of attacks indicate that the group’s future survival is in serious doubt.

Also, the Taliban cannot permanently rely on Pakistani support. Indeed, in the long term, that support is unsustainable. Mounting pressure—from the Afghan government, the Afghan population, and the international community—will eventually force Pakistan to choose between the Taliban and its relationship with an increasingly strong Afghan state. It is in Pakistan’s own geopolitical interest to choose the latter.

Particularly after the wave of recent attacks in Afghanistan, public anger toward Pakistan has increased. Afghan politicians, civil society organizations, and the public are outraged by Pakistani meddling. Almost the entire nation blames Pakistan for the political instability in Afghanistan, and several Afghan religious scholars have even declared Jihad against Pakistan.

Afghanistan’s President Mohammad Ashraf Ghani recently stated: “We hoped for peace, but war is declared against us from Pakistani territory.” His statement resonated with all Afghans, and it spread like wild fire among the public, particularly in light of the recent attacks in Kabul—one of which killed at least 15 people and wounded hundreds more.

The Afghan government and public continue to work for peace, stability, and prosperity, and the Taliban’s attacks, of late, have done nothing to slow the country’s progression toward democracy. (Indeed, most of the world’s stable democracies have emerged from some sort of conflict.) Now, democracy has been planted in the Afghan soil, and its growth—while slow—is continuing. The Taliban must embrace reconciliation. It is their only option, and it will not be around forever.

The Side Deal Not Yet Signed



Despite aggressively rebutting each other in public over the recent Iran nuclear deal, both President Obama and Prime Minister Netanyahu have clarified in the past month the resilient strength of U.S.-Israel relations. Nevertheless, public debate over the agreement erodes the strategic alliance between the countries, jeopardizing both nations’ interests. Washington and Jerusalem are not going to agree wholesale on the Iran issue. However, in order to weather this squall and maintain the alliance, both sides should focus their efforts on an intimate U.S.-Israel dialogue and agreement. Now that the American president has managed to secure enough support in Congress to block any legislative attempt to override him, it is time to change the discussion between the two leaderships.

Netanyahu asserts his responsibility to voice Israeli concerns about the dangers of the Joint Comprehensive Plan of Action (JCPOA) and corollary deals signed between the International Atomic Energy Agency (IAEA) and Iran. The Israeli prime minister should adhere to his responsibility, but instead of purely grandstanding about achieving these objectives, his efforts would be more effective pursuing a private strategic dialogue with the American administration.

In this dialogue, for example, Israel should point out that the nuclear deal does not “cut off every pathway that Iran could take to develop a nuclear weapon” – an objective set by President Obama. Iran will be able to advance its research and development program, creating more advanced centrifuges that shorten the time required to cross the nuclear threshold. It does not guarantee absolute transparency, leaving some “blind spots” that could potentially be exploited for military purposes. It also lacks a feasible and rapid international response mechanism that encourages Iranian compliance.

Israel also has concerns that if Iran does not decide to violate the agreement and cross the nuclear threshold in the first decade, it could close the gap in the second decade without cheating. Iran can enhance its nuclear program after ten years, so any western attempt to stop it from going nuclear would be extremely difficult. Though Iran has possessed significant threshold capabilities in the past two years, it never had international legitimacy to do so. Now that it does, there is a risk that other countries in the region will push for the same.

Furthermore, Israel should also explain that even though the Obama Administration rightly argues that the nuclear agreement was never intended to address Iranian behavior in the region, it cannot disregard the consequences of improving Tehran’s international status while it boldly supports terrorism, aggressively promotes regional instability, and takes an active role in the civil war in Syria. Relieving the embargo and Iran’s missile program sanctions does not help the administration’s argument. Netanyahu has warned that some of the more than 100 billion dollars Iran expects to receive will increase its support of terrorism and empower its proxies against Israel (namely, Hezbollah in Lebanon and Hamas in Gaza). Altogether, in the eyes of many, the nuclear deal weakens the credibility of American deterrence (both nuclear and non-nuclear) as well as its commitments to allies in the region on those issues.

To alleviate Israeli concerns, the U.S. should sign a side deal with its strongest ally in the region. The notion of a parallel agreement has been promoted in recent months by former head of IDF Military Intelligence General Amos Yadlin and myself. This agreement should be signed before international sanctions against Iran are lifted as a product of intensive dialogues between Washington and Jerusalem.

There are five critical components to an effective agreement.  First, both countries should engage in unprecedented intelligence collaboration to swiftly detect any Iranian violation of terms. This commitment of resources will be an effective information-sharing mechanism and part of a rapid decision-making process.

Second, the two countries should agree on an interpretation of the agreement and responses to Iranian non-compliance. They must clearly define how a nuclear deal with Iran would be implemented, how to handle violations, and what could be done outside the framework to incentivize Iranian compliance.

Third, the two governments should work out a contingency plan under which if Iran decides to acquire nuclear weapons, Israel will be able to take action independently without relying on an international consensus. In order to be a credible deterring force against this potential threat, especially after the main constraints on Iran’s nuclear program are lifted, Israel will require advanced weaponry to ensure that this scenario is not realized under any circumstances.

Fourth, special efforts should be made to halt Iran from advancing its missile program before it is capable of launching nuclear attacks against its adversaries in the Middle East and beyond. Iran’s missile program is a crucial factor in the Iranian nuclear decision-making calculus, and may be the most significant challenge faced by Tehran if they decide to cross the nuclear threshold. The nuclear deal endeavors to preempt this concern as it states that missile program-related sanctions will only be lifted after eight years. The U.S-Israel deal must address this.

Lastly, the U.S. and Israel should agree on tenets for countering Iran’s possible exploitation of the nuclear deal and expanding influence in the region. These measures should both improve Israel’s defensive capabilities and include a bolder American offensive strategy for the Middle East, both aimed at actively challenging Iran’s regional policy. This essential tenet signals to Israel that Washington is not abandoning the Middle East and leaving it susceptible to the influence of Iranian hegemony as it becomes a more dangerous place. As the Iran deal and its tributary deals are fait accompli, the U.S. and Israel should actively cooperate on formulating a policy for the next major side deal between the two countries.